Market Ahead, December 16: Top factors that could guide markets this week

Easing global sentiments, GST council meet, and macro data will be the top factors driving the markets this week.

While the US and China have reached their much-awaited 'phase one' trade deal, Boris Johnson's Conservative Party has won the UK general elections. Johnson has now promised to get Brexit done by January. Equity markets rallied on the twin good news on Friday and the positive momentum is likely to continue this week.

Back home, investors will await WPI inflation data for November scheduled to be released later in the day for further cues on the state of the economy. 

Another crucial event will be the GST Council Meet to be held on December 18. Finance Minister Nirmala Sitharaman will chair the meeting in which the Council may discuss about an alternative mechanism for the compensation cess and ways to boost revenue from indirect taxes.

Besides, the Reserve Bank of India will release the minutes of the December monetary policy committee meeting on Wednesday. The MPC had surprised the street by taking a pause after five straight rate cuts. 

Banking stocks will be in focus today as the lead banker of the bankrupt Essar Steel, the State Bank of India (SBI), is likely to settle dues of other lenders as it received Rs 40,000 crore on Friday from ArcelorMittal, which is going to takeover the company bringing to an end to the much-prolonged resolution process. The SBI may settle the dues of all the other lenders today.

These apart, the rupee's movement against the US dollar, foreign fund flow, and the oil price movement will also impact investors' risk-taking appetite.

Asian shares ticked higher on Monday as investors cheered an announced trade agreement between Beijing and Washington. That helped push the MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.2 per cent. Australian shares added 1.23 per cent but Japan’s Nikkei pulled back 0.2 per cent. SGX Nifty was indicating a flat to negative start for the domestic indices.

In commodities, oil prices fell but remained near three-month highs on Monday. Brent crude oil futures fell 23 cents to $64.99 a barrel.

Back home, the Sensex settled 428 points higher at 41,010 levels and the Nifty50 index closed up 114 points at 12,086 level. 

Going ahead, analysts say if Nifty is able to breach the level of 12,200 it will lead to short covering move up to 12,400. Therefore, traders should buy at every dip keeping a close eye on 12,000.

In the end, here's a trading idea for you by CapitalVia which recommends buying Adani Power Ltd above Rs 62.25 for the target of Rs 67.50 with stoploss at Rs 58.50.